Earnings Call Transcript - XNSE:EPIGRAL 2026-11-02

Operator

Ladies and gentlemen, good day and welcome to Epiglare Limited Q2 and FI27 earning conference call hosted by MK Global Financial Services Limited. As a reminder, all participant line will be in the listen-only mood and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance in the conference call, please signal an operator by pressing star then zero on your touchstone phone. I now hand the conference over to Mr. Gaghan Dixit from AMK Global Financial Service Limited. Thank you. I am over to you.

Gagan Dixit, Analyst — Emkay Global Financial Services Limited

Yeah. Good evening, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Malik Patel, Chairman and Managing Director, Mr. Koshal Suparkar, Executive Director, Mr. Rakesh Agarwal, Key Financial Officer, and Mr. Milen Kotecha, Investor Relations and Strategy. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.

Malik Patel, Chairman

Good evening, everyone, and welcome to the call to discuss Epicurel's Quarter 2 FY27 performance. I believe you had an opportunity to review the earning presentation that was released earlier today. As we go through Quarter 2 FY27, the chemical industry continues to face a complex, volatile, and highly challenging operating environment, which advance expected to persist into the upcoming quarter. While we are seeing a positive recovery in volume demand and forming product realization, overall margins remain under pressure. The shrink is a direct result of a lag on time to pass through, volatile bid stock prices, and the normalization of previous inventory late days. Furthermore, external vulnerabilities, including the ongoing waste issue crisis, extended lead times, increasing global freight rates, and rising domestic transportation costs continue to squeeze the industry's bottom line. Even in this challenging operating environment, we delivered revenue growth of 28%, driving by volume growth, and improved realization. Our derivatives and specialty business contributed 57% of our total revenue in Q2 FY27. However, the EBITDA margin were expected by high raw material prices from the volatile situations in West Asia. However, looking at the first half of FY27, our performance remained resilient with revenue growth of 21% and EBITDA margin of 22%. Historically, the second half of the fiscal year outperforms the first, as Antwerp is typically on off-season for off a few of our products. Possibly, we maintain positive outlook for I2 FY27. While the current environment is challenging, India's growing demand for chemicals keeps us positive about the industry's long-term outlook. In line with this, we have sustained our capex plans to ensure we are ready to meet this expanding market. Our capacity expansions for CPVC and EC epichlorohydrine are now in the final stages, with trial runs currently underway. We expect to commission both plants within a quarter time. Additionally, following the board's approval for the epoxy resin and formulations and multipurpose plant projects, last quarter, we are moving ahead with both initiatives as plants. The final plans for epoxy resin and MPP multipurpose plant are now ready, and we will soon begin the customer approval process. This proactive step will help minimize qualification timeline once commercial production begins. As conveyed earlier, the revenue contribution from derivatives and speciality business stood at 57% in quarter to FY27. This transition will accelerate going forward driven by capital expenditures that we just discussed. Ultimately, the broadening our customer base to diversify and strengthen our business model, to strengthening our integrated manufacturing platform and expanding into high-value chemical products. Firmly believing that this ongoing portfolio diversification will enable us to deliver consistent growth over a longer period of time and secure long-term value for our stakeholders. I now hand over the call to Mr. Rakesh Agarwal, who will take us through the financial.

Rakesh Agarwal, CFO

Let me take you through the quarterly numbers. Year-on-year revenue increased by 28% to Rs.752 crores compared to Rs.589 crores in Q2 F526. This increases on account of increase in sales revenue, value of 6% and because of improved realization for majority of the products. Ebitda increased by 3% to Rs.136 crores compared to Rs.132 crores. In Q2 F526, Ebitda margin stood at 18%. It was impacted on account of high cost of raw material for Q2 F527 on account of global uncertainty impacting raw material and finished goods prices. PAT grew by 26% to Rs.64 crores compared with PAT of Rs.51 crores in Q2 F526. Now, let me take you through half-yearly numbers. In first half-year of FI27, our revenue grew by 21% at Rs. 396 crore. Even in this challenging and volatile raw material and finished goods prices, we are able to maintain margin of 22%. PAT stood at 164 crore compared to 131 crore. PAT margin stood at 11% similar to H1 FY26. ROC stood at 15% on 30 September 26 on account of lower EBIT for trailing 12 months. Also because of sizable capital working progress, which is yet to be contributed to profit and loss, if we remove capital working progress, then our ROC stands at 18% as on 30 September 26. Net debt to EBITDA stood at 0.9 as on 30th September 26 versus 0.8 on 30th September 25. Our net debt stood at Rs. 514 crores versus 496 crores as on 30th September 26. We are at comfortable level in terms of our debt. We have spent Rs. 88 crores on the capex in the first half of 27. With this, we can now open the floor for questions.

Operator

Thank you, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are required to use handsets while asking a question.

Operator

Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Operator

First question comes from the line of Nirav Jemudia with Anvil Weld. Please go ahead.

Nirav Jemudia, Analyst — Anvil Weld

Yes, sir. Good evening. So, a few questions from my side. So, first is on the call side. Like, what we have seen over the last three, four months is that there has been a close to around 60-70% increase in the coal prices. So, possibly it could have affected a lot many coal-based caustic soda plants. So, if you can share your thoughts here, like, have we seen the commensurate increase in the caustic soda prices in the recent months to cover this cost increase, and also on the chlorine side, like, very recently we have seen prices improving a lot, like, they've been close to around positive. So, is it more towards covering the cost because of higher energy prices, or do you believe that the downstream demand has also improved, which has led to this price improvement?

Malik Patel, Chairman

I think, you know, the coal prices increased, and most of the chlorophyll plants in India is based on coal. Even gas has more increased than the coal in terms of fuel prices in the current environment. So, the caustic soda prices is globally, and I think globally it has not moved as much as required according to the energy prices. So, the entire low prices has come to on chlorine side, which is easy to increase in terms in India, because it has increased but also further is going to increase. So, I would say it is a new in the chloro-alkaly industry where the chlorine is almost like we used to give a chlorine in the past. Now, I think it is much easier to increase the price pass-on because of the pricing, but the chlorine is domestic-based only. So, I think it is easy to transfer the energy cost, which has increased in the chloro-alkaly industry. I think demand has also increased as value addition and the downstream product is commissioned.

Nirav Jemudia, Analyst — Anvil Weld

Sir, if you can share what was the ECU realization for second quarter, and what is it currently, and if you can give the range for chlorine prices, that would be very helpful.

Rakesh Agarwal, CFO

So, the ECU for Q2 is around 31,000 and 32,000, and the chlorine is somewhere around zero.

Nirav Jemudia, Analyst — Anvil Weld

This is for Q2, you are seeing?

Rakesh Agarwal, CFO

So, ECU was for the Q2, and chlorine would be somewhere in that range only, maybe 0, minus 1, but overall put together it's around 0.

Nirav Jemudia, Analyst — Anvil Weld

Okay, and what it would be currently?

Rakesh Agarwal, CFO

So, currently it's 0, that's what I'm saying, for chlorine.

Nirav Jemudia, Analyst — Anvil Weld

No, I'm talking about the ECU.

Rakesh Agarwal, CFO

ECU again will be in the same, ECU will be in the range of 32,000, 33,000.

Malik Patel, Chairman

Slightly it is increased, because we believe that in the quarter 3 and quarter 4, the caustic global price will increase for

Nirav Jemudia, Analyst — Anvil Weld

Sir, just a follow-up question. So, A on hydrogen peroxide, is there a possibility that we can move up the ladder in terms of value-added grades, possibly on the electronic side, which has a better realization, and on the production side? Profitability side, it gets a better profitability table also. So, your thoughts on hydrogen peroxide and B on chlorotolines, where are we currently? Like, is it possible for us to capture the initial side of benzoyl chloride or benzoyl alcohol before we start moving to OCT-PCT? So, if you can share thoughts on both these aspects, that would be very helpful.

Malik Patel, Chairman

Yeah, so hydrogen peroxide, yes, we are moving into the value addition in terms of solar application, hydrogen peroxide, we are going to start manufacturing soon, probably from the quarter four onwards, but compared to the volume, it's a niche application, but the volume is not substantial compared to the size of the manufacturing, but yeah, we are going into the value addition in terms of the hydrogen peroxide for the solar application. In the coming quarter 4, we will commission the plant. And the second question regarding the benzoyl alcohol and medzoyl value chain, we are not going in that line. Our focus is the orthothorotoline and parathorotoline, which nobody is manufacturing in India. And we are going forward in terms of the value added chemistry for the pharma intermediate and the agro intermediate, which can consume this.

Nirav Jemudia, Analyst — Anvil Weld

So, sir, where are we currently in terms of chlorotolins? Like, have we started seeding the market or our products are getting placed in the market? So, when can we see the real benefit of chlorotolins started accruing to us?

Malik Patel, Chairman

So, this year probably we are going to have almost close to 100 crore revenue generation from the chlorotolins plant. So, our volume is increasing on quarter on quarter basis. The volume is increasing quarterly on the chlorotolins.

Nirav Jemudia, Analyst — Anvil Weld

Sir, on a peak basis, how much this business should contribute, like you mentioned, 100 crores, but let's say, whenever we scale up this business, what could be a right assumption this business can contribute to Apigal's top-line?

Rakesh Agarwal, CFO

Around 300 to 350 CRF at optimum relation levels.

Malik Patel, Chairman

So, chlorotoline side, as of now, is around 300 CR, but, you know, as we are doing value addition, probably in the future, it may increase further based on what kind of value addition we are doing it. But currently, we are working on the chemistry in the R&D level as well as the pilot plan we have also commissioned in last quarter. So, our customer approval is going to take place in the value added chemistry much faster than what we have done in our chlorotoline business in the past.

Nirav Jemudia, Analyst — Anvil Weld

Perfect, sir. Thank you so much, sir. I wish you all the best. I'll join back in the queue. Thank you.

Operator

Thank you. Ladies and gentlemen, anyone who wishes to ask a question, we press star and one. Our next question comes from the line of Abhinav Mandowara with Equitas Investments. Please go ahead.

Abhinav Mandowara, Analyst — Equitas Investments

Thanks for the opportunity. My first question was regarding how has the CPVC prices been in last Q2 and currently, And what are the spread, PVC, CPVC spreads, and what is the utilization at which we are operating?

Rakesh Agarwal, CFO

So, in terms of CPVC relations have been in the range of around 120, 125 rupees a kg. And in terms of, it has moved in line with the raw material price increase. So, quarter one, the prices were on a very volatile side. It was high, it went down, again, it went up. And again, in Q2, the raw material PVC price had went up and currently also is on a higher side. So that's where it is higher on the C-PVC side as well. And utilization levels have been in the range of around 60-65%.

Abhinav Mandowara, Analyst — Equitas Investments

Further increase in terms of the PVC price and the C-PVC price in the quarter 3 and quarter 4 on. Okay, and how are our nature of contracts? That is, how do we adjust our prices? Is it directly passed on or we have a monthly, quarterly? How are the nature of contractors?

Malik Patel, Chairman

Our contract prices in some big customers, we are on the quarterly basis, and the smaller customers is on the monthly basis. So, we have both kind of models based on the volume.

Abhinav Mandowara, Analyst — Equitas Investments

I'll turn back to you.

Operator

Thank you. Our next question comes from the line of Rakesh, an individual investor. Please go ahead.

Rakesh, Analyst — Individual Investor

Yeah. Am I at work? Yes, yes. Thank you for the opportunity. I want to know that is there any impact of this El Nino on our company revenue and many products?

Rakesh Agarwal, CFO

We are into products which is majorly not into the agrochemicals or the pharmaceuticals, so we are not directly impacted, but definitely indirectly when it impacts the overall economy, at that time it comes, but we are not into any such product which would have a direct impact of El Nino.

Rakesh, Analyst — Individual Investor

Okay. And one more thing regarding that tax demand, which is published in two days before. Can you tell me about that?

Rakesh Agarwal, CFO

It's nothing. It's a routine thing that has come. So, it comes and then we revert and it's a normal thing, nothing specific.

Rakesh, Analyst — Individual Investor

And one more thing, like, actually, the stock price is written so much, maybe by the market situation, but is there any chances of, like, a promoter buying to increase the interest for a retail investor?

Rakesh Agarwal, CFO

Rakesh, this call is majorly discussing on the performance of the company.

Rakesh, Analyst — Individual Investor

Okay, okay, okay.

Rakesh Agarwal, CFO

Yeah, so.

Rakesh, Analyst — Individual Investor

Thank you.

Operator

Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Our next question comes from the line of Venkatesh, an individual investor. Please go ahead.

Venkatesh, Analyst — Individual Investor

Yeah, thank you. My question is on the chlorotally. What will be the realization margin?

Rakesh Agarwal, CFO

So, we generally don't share product-wise margins. As the company put together, we would be earning, I mean, margin in the range of 22-23%, 22% kind of margin. So, that will be there for all the products. So, we won't be sharing the product-wise margins.

Venkatesh, Analyst — Individual Investor

Okay, sir. Thank you. Thank you. That's all.

Operator

Next question comes from the line of Nirav G. Moodya with Anvil Weld. Please go ahead.

Nirav Jemudia, Analyst — Anvil Weld

Thank you again. Sir, just wanted to have your thoughts like this quarter, our operating profit was down 43 crores on a sequential basis. So, if you can share your thoughts in terms of which of the products in our product portfolio had a positive contribution and which of the products had a negative contribution because of which we have seen our EBITDA coming down on a Q1Q basis. So, some thoughts here.

Rakesh Agarwal, CFO

So, in this volatile situation, I mean, we were able to maintain overall profitability of the company, but specifically, if you look at the chloralkali side, because of the, as you rightly said in the starting of the call, the increase in the coal prices, the energy prices had impacted particular the chloralkali where the profitability would have gone down. So, that is the major case. Otherwise, overall business is good.

Nirav Jemudia, Analyst — Anvil Weld

Sir, in terms of capacity utilization, if you can share for ECH, hydrogen peroxide, and caustic soda for second quarter, that would be helpful.

Rakesh Agarwal, CFO

So ECH would be around 75 to 80 percent utilization levels, and hydrogen peroxide would be again 95 percent utilization levels.

Nirav Jemudia, Analyst — Anvil Weld

And caustic soda was?

Rakesh Agarwal, CFO

In the range of 75 percent utilization levels.

Nirav Jemudia, Analyst — Anvil Weld

The last question from my side is on the power side. In one of our earlier conference calls, you mentioned that our total power requirement for the complex as a whole is close to around anywhere between 120 to 140 megawatts, depending upon the utilization levels of our products. So, are we doing anything in terms of reducing our exposure to the coal-based power plant through renewables, and if yes, how this should shape up over next two, three years so that the impact could be minimized?

Malik Patel, Chairman

So, currently, I think you are aware about it, that we have already done a solar and wind hybrid project, we have commissioned one, and we have already announced for the second project also. So, going forward, at least, we see that in down the line, two, three years' time, I think our 30% or 30 to 35% of our demand of total will be cattled from solar and wind That's the model people are using it in terms of the chemical industry for reducing their energy cost. So we do not need to invest, we are not going to invest substantially on this. Only we are going to invest 26% of the equity on the, not a major capital.

Nirav Jemudia, Analyst — Anvil Weld

Thank you so much and festival wishes to the entire team of capital.

Malik Patel, Chairman

Thank you.

Operator

Thank you. Ladies and gentlemen, anyone who wishes to ask a question may bless star and one. Next question comes from the line of Manan, Mundra, and Individual Investor. Please go ahead.

Manan Mundra, Analyst — Individual Investor

Hello. Hi. Thanks for the opportunity. I just wanted to know what is going to be approximate maintenance CAPEX as a portion of your gross fixed assets that we have invested in.

Rakesh Agarwal, CFO

Maintenance capacity is generally in the range of 1.5% of the gross block every year.

Manan Mundra, Analyst — Individual Investor

Okay. And another question is, are we seeing any pressure on CPVC margins also because of the new capacities coming in from the competitors?

Rakesh Agarwal, CFO

See, again, the competition capacities are coming, but at the same time, the demand for this product is also increasing. So, demand for CPVC is increasing in the range of 13% each year every year. So, one year can be here and there, but considering the way demand is growing, any new supplies that are coming by us or even with others, India's demand will be enough to absorb all the supplies. So, one year can be here and there because the supply comes in a big way, whereas the demand goes gradually. But considering that situation over a longer period of time, when I say longer, maybe in a three to four years' time, the capacities will be absorbed by the growing demand.

Manan Mundra, Analyst — Individual Investor

Okay. Okay. And just one more thing. We have all our chemicals and we have an integrated plant and that helps us in maintaining economies of scale. I completely understand that. But do we face any, do we have any disadvantage, I mean, logistically, if we have to send our, you know, CTVC epichloroide or any other products that we are making to other parts of the country? I know there are large manufacturers in Gujarat itself, but suppose if we have to sell those things down to south or in the north or in the eastern part of the country, Do we face any negative advantage because of the logistics cost?

Rakesh Agarwal, CFO

See, as of now, if you see, there are only two or three selected players in India, and majorly everyone is on the western part, I mean, removing one particular supplier. So, in terms of it's not that there is someone else who is at advantage and we are not. So, considering that situation, we are in par with everyone else. So, I don't see anywhere any disadvantage in terms of we having our plant in western part or we have to sell the protein in the eastern part of the India. That's not the case as of now.

Manan Mundra, Analyst — Individual Investor

Okay. And again, just coming back to CTVC and VCH, is there a customization for each customer so that even if a new competitor comes in, they cannot, you know, replace us from day one just on the basis of cost? And they will also have to, you know, take approvals from the customers in case of CPVC and ECH.

Rakesh Agarwal, CFO

Yeah, so see, in terms of every product, the approval is definitely that is required. In CPVC case, the approval is longer, considering it goes into pipe. So, it takes a longer period of time to get approval and then the gradually volume increase. Similarly, on the ECH side, it's not that rigorous. But again, approval is something which is required for even for that product. But the CPVC side, it takes a bit longer because you have to make pipe, then all the testings are done on the pipe, and then finally it gets approved. So it takes time. But again, it's not that simple as it seems. So, I mean, people will enter, but not like everyone can do that.

Manan Mundra, Analyst — Individual Investor

Yes. So, you see, I'm not from chemical industries. I'm just trying to understand from you what kind of mode we have here, what kind of competitive advantage we have here. So, if you can just elaborate from your side on this, that's it.

Rakesh Agarwal, CFO

Yeah, so see, we have our own chlorine, and we first started as CPVC. I mean, we have the largest capacity in CPVC, so we are almost catering to all the customers in India. And plus, this technology is not something that is easily available, like what is there in the case of ECH. So it's not that easily available. Plus, also, it takes time to get approval, then you get the volumes from the customers. So, it's a gradual process. So, it's not that easy. So, first, more advantages will always be there. Plus, we have our chlorine in-house, which comes through pipeline. So, managing chlorine of that much quantity is something that we don't have to do through turners or any other thing. It is done through pipeline. So, these small things all add up to the benefit of the company.

Manan Mundra, Analyst — Individual Investor

Okay. Okay. Thank you. That's it for now. Thank you very much.

Operator

Thank you. Next question comes from the line of Gagan Dishit with AMK Global Financial Service Limited. Please go ahead.

Gagan Dixit, Analyst — Emkay Global Financial Services Limited

Yeah, thanks. So, I have a question for the FY31 guidance. So, earlier the CMD has this guided 2,900 crore revenue by FY27 and 5,000 crore by FY31. So, as far as I call this, Epoxy and MPP together are guided at around 1,300 to 1,500 crore peak revenue. So, how does this 2,100 crore gap split across CPVC, ECH expansion, Epoxy, MPP? So, that's my first question. And the subsequent question is, does FI31 need another KPEX now beyond the 600 crore? And that's the two questions.

Rakesh Agarwal, CFO

Our gross block, we are already working on the CPVC and the ECH, the lag which will get commissioned in a quarter's time. So once that is commissioned, there will be an additional maybe 500, 600 CR of gross block. So it will be 3,500 CR of gross block. And that itself is good enough to factor. It can factor revenue in the range of around 3,600, 3,700. We are doing capex for the MPP 600CR again, so this cross block of 3,600 or 3,500 will go to 4,100 or 4,200. So that much of capex is good enough to fetch a revenue in the range of around 5,000, 5,100 kind of revenue by FY31. This is what we are estimating based on current realizations and a gradual ramp-up of the capex that we will commission this year as well as next year.

Gagan Dixit, Analyst — Emkay Global Financial Services Limited

Yes, sir. So, my second question is about the ECH. Here, sir, capacity doubles in Q3 FY27, but the captive, in fact, the demand for, I mean, for the epoxy plant only comes in the second half of the FY28. So, what share of the ECH will be exported, and when you expect the full utilization,

Rakesh Agarwal, CFO

The demand for the ECH is also growing in India, and plus there is an export opportunity as well for the ECH. So, once we double the plant of ECH, we have estimated the ramp-up will be gradual in the coming months. And what you said is true, epoxy resin is something That will be commissioned. I mean, we are targeting to get commissioned by the March 28th, so maybe it will drive the revenue in FY29 onwards. So at that time, it should be at reach at optimum level. And considering the capacities and everything, we are estimating that around, we can say, 50% of what ETH we will have will be consumed. Capital in the balance, 50% will be selling in the market.

Gagan Dixit, Analyst — Emkay Global Financial Services Limited

Yeah, that's not my answer.

Operator

Thank you. Is there no further question from the participant? I now hand the conference over to the management for the closing remarks. Thank you, and over to you, Tim. Ladies and gentlemen, we have Gagan Dixit from AMK Global Service.

Gagan Dixit, Analyst — Emkay Global Financial Services Limited

Yeah, yeah, thanks. Thanks for everyone for joining this conference, and happy giveaway to all.

Operator

Thank you so much, Gagan. Ladies and gentlemen, on behalf of AMK Global Financial Service Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.